U.S. regional bank stocks reversed premarket gains in early trading on Thursday, slipping back into negative ground after a recent rebound powered by hopes that the sector’s troubles were nearing an end.
Western Alliance fell 1%, erasing premarket gains of 4.2%. The Phoenix-based lender had surged 27% till Wednesday on reporting strong deposit growth in an attempt to reassure investors of its financial health after three regional banks failed in recent months.
PacWest Bancorp, which is currently exploring strategic options, climbed 2.7% in early trading on Thursday, after jumping 7.9% in premarket hours. The stock has lost about 75% so far this year.
Battered U.S. regional banks had found some reprieve earlier this week thanks to favorable brokerage actions following Western Alliance’s deposit disclosure, along with hopes that Washington will reach a deal to raise the U.S. debt ceiling.
Fund managers and billionaire investors had also doubled down on mid-sized lenders, hoping to buy the dip.
The KBW Regional Banking Index jumped 7.2% on Wednesday, recording its biggest percentage gain in nearly two years. The index has risen nearly 11% from a 2-1/2-year low hit earlier this month.
Among other movers on Thursday, Zion Bancorp wiped premarket gains to fall 1.3%, while First Horizon was flat.
Meanwhile, Charles Schwab Corp edged about 1% lower after the financial services firm said it was looking to raise $2.5 billion in debt.
Source : Reuters
